The Iranian Army has made substantial advances in the war with Iraq in recent months, moving the 380-mile front markedly closer to the Iraqi border and crossing inside Iraqi territory in the far north, according to diplomatic and eyewitness reports.

As a result of the Iraqi reverses, U.S. and European specialists have suggested that the little-reported conflict could be at a turning point--leading to negotiations or perhaps an Iraqi retreat--after more than a year of near-stalemate along battle lines drawn shortly after Iraq's initial push onto Iranian soil 16 months ago.

But President Saddam Hussein's Iraqi government has strong backing from his Arab allies, including money from Saudi Arabia and a pledge of volunteer warriors from Jordan, along with a well-supplied and numerically superior military establishment. Naim Haddad, a high-ranking Iraqi official, recently pointed out that the war is still being fought on Iranian territory with Iraqi troops controlling 9,650 square miles of Iranian soil.

Saddam Hussein nevertheless has made secret approaches to Algeria seeking mediation with Iran's Islamic leaders, Iraqi dissident sources reported, but there is no sign that Ayatollah Ruhollah Khomeini and his followers are willing to settle for less than a clear-cut victory based on their announced conditions of Iraqi withdrawal, reparations and a declaration marking Iraq as aggressor in the conflict.

"They have taken a firm decision," said a source who recently had discussions with high-ranking Iranian officials in Tehran.

"The war will end only with Saddam's fall," he added. "They may accept mediation. They may accept delegations. But the war won't stop until Saddam falls. This will be valid as long as Khomeini is alive."

An Iraqi dissident who toured the front with Iran's permission reported recently that Iranian recap-ture of the border town of Bostan two months ago has cut Iraqi lines and lifted pressure on Susangerd and Ahwaz to the southeast.

In the south, last fall's counterattack near Abadan pushed Iraqi troops behind the Karun River, loosening the long siege on Abadan's refinery and bringing Iranian artillery closer to the key Iraqi city of Basra. Iranian commanders told the visitor they plan this spring to infiltrate Revolutionary Guards into marshlands that hinder Iraqi armored vehicles in a broad area where the Tigris River flows into the Shatt-al-Arab estuary at the head of the Persian Gulf.

Already, Iraqi trucks seeking to resupply troops around Abadan and in Khunninshahar, formerly Khorramshahr, have to take a roundabout route to avoid artillery bombardment, driving south to near the Kuwaiti border before doubling back north, he added.

In addition, he said, Iranian victories last month around Qasr-e-Shirin at the northern end of the front have facilitated contacts between Iranian troops, who now operate inside Iraq, and Kurdish rebels harassing Iraqi troops in northern Iraq as part of a joint effort with Iraqi dissidents seeking Saddam Hussein's overthrow.

A key element in Iranian success this winter has been big artillery, which the Iranian Army has been using in large-scale--if indiscriminate--barrages into Iraqi supply routes, the source reported. After shortages in the war's first year, he said, Iranian factories are now turning out a sufficient ammunition supply.

Another factor is Iraqi immobility. In one battle, Iraqi T62 tanks, which were dug into the earth according to Soviet-style tactics, were unable to swing around swiftly and move out against Iranian attackers who had flanked them, a French diplomatic source said. Moreover, he said, Iraqi officers fearing Saddam Hussein's anger hesitate before taking decisions without referring back to Baghdad. Their fear is well-founded, he added, because several officers have been executed for poor performance in battle.

In addition, Iranian radio broadcasts beamed toward Iraqi lines have exploited the fact that a high percentage of Iraqi conscripts are Shiite Moslems, the Iranian branch of Islam, while their officers are often Sunni Moslems.

Recent broadcasts monitored here, for example, have included some of the 7,000 Iraqi war prisoners said by Iran to be in Tehran, competing in a Koran-quoting contest. In others, Iraqi prisoners were heard extolling their treatment by Iranian guards.

Western diplomats believe this is creating a morale problem on the Iraqi front. The dissident Iraqi said the problem is compounded because most Iraqi infantrymen are poorly educated villagers, susceptible to the radio's Koran-based arguments.

Ahmed Salamatian, a member of parliament who took a strong interest in military supply efforts before fleeing to exile in France last fall, said a big obstacle to ammunition production had been lack of detonators, which now have been purchased in large numbers on the international market.

The exile, a Bani-Sadr disciple, said the Army benefited from some foreign help, particularly North Korean antiaircraft weapons. But he said Iran organized its supplies mostly by buying overseas, sometimes after frauds in which several dishonest go-betweens made off with fortunes paid by Iranian arms-buying missions.

Press reports say Iran also has been getting military supplies and advisers from Soviet allies in Eastern Europe. A proposed law submitted to the Iranian parliament last month sought authorization for hiring "95 foreign specialists to help the Defense Ministry." Their nationality was not specified.

A well-placed Iranian source said Israel also has sold military equipment to Iran, including aircraft tires.

The tires were sorely needed, according to opposition sources here. Iranian planes returning from combat flights have suffered blowouts on landing because their tires are so worn, they said, citing smuggled reports from dissident Iranian soldiers.

Although Iranian mechanics have kept a number of U.S.-supplied Cobra helicopter gunships in the air, the opposition sources said they have reports from Iranian officers that only about 10 of the 77 U.S. F14s bought by the shah remain airworthy. The authoritative International Institute for Strategic Studies estimates nine are in service, along with about 50 of the 90 F4 Phantoms delivered in the shah's day.

What appears to be a tacit understanding between the warring nations has prevented large-scale use of air power against population centers or oil installations. The decisive recent battles, particularly at Qasr-e-Sharin, have been fought by manpower backed by artillery, French diplomats and returning visitors say.

Iranian and foreign sources recently in Iran agree that the Iranian Army and Revolutionary Guards have sharply reduced the quarreling and back-biting that had hindered earlier Iranian operations. According to the Iraqi dissident, the youthful volunteers appear more willing to accept orders from experienced officers and the officers have used them as the cutting edge of infantry attacks because of their disregard for danger.

To illustrate his point, the source said he saw on Tehran television a tape of Revolutionary Guards charging into a minefield to clear the way for a crucial troop movement by blowing up the mines with their own bodies.

"They are fanatic," he said. "You cannot believe it."

The extremism also is reflected in the guards' internal security duties, opponents of the government charge. Massoud Rajavi, leader of the leftist, Moslem Mujaheddin-e-Khalq guerrillas who fled Iran lat year to exile in France, claimed a civilian pilot was arrested as he returned home from a Tehran party with his wife recently because he had drunk an alcoholic beverage, banned under Khomeini's Islamic strictures. He received 100 lashes with a whip and was released, Rajavi recounted. But when he awoke the next morning his wife was dead in the bathroom and beside her was a suicide note saying she had been raped repeatedly by guards while her husband was being whipped.

The guards, headed by Mohsen Rezai in a Supreme Council, are estimated to number 200,000, more than the regular Iranian Army by the count of the International Institute for Strategic Studies, but many are untrained youths for whom membership is a solution for unemployment, according to exile opposition members.

Regular Army officers, who are thought to constitute the most organized group in the country, have been absorbed by the war, frustrating monarchist and conservative hopes abroad for a military coup.

As a result, exile leaders on the right and left claim Khomeini is deliberately prolonging the conflict to unify the country, distract citizens from their economic problems and keep the Army out of politics.

"If the Army was not occupied, it could be used against the government," Rajavi said. "Be sure that the end of the war is the end of Khomeini."